Dubai: Developer says work to resume on The World islands

The World has not come to an end, after all. Work is to restart on the island
archipelago off the coast of Dubai.

Most development plans on The World have been suspended due to the troubles of master-developer Nakheel and Dubai WorldPhoto: DigitalGlobe / Barcroft Media

By By Richard Spencer, in Dubai

6:03PM GMT 17 Dec 2009

The Austrian developer who has bought much of Europe – the Gulf version – says construction will begin on Germany next year.

The World was the only place in Dubai for new holiday homes, the developer, Josef Kleindienst, told a local newspaper.

"Our company is specialised in European customers and they are looking for holiday homes," he said.

The emirate is currently on an international public relations drive in the wake of the damage caused by its call for a standstill on the debts of Dubai World. The state-run conglomerate counts Nakheel, master-developer of The World, on which most plans had been suspended, among its subsidiaries.

The two men who have emerged as key advisers to the ruler, Sheikh Mohammed bin Rashid al-Maktoum, have been in London and the United States this week to explain the emirate's plans.

These include paying off the most immediate of Nakheel's debts, a $4.1bn (£2.55bn) bond, using money loaned to Dubai from Abu Dhabi.

The pair will also be promising improved transparency, after repeated criticism that creditors and the media were not kept informed of government thinking.

Tens of millions of dollars were lost and gained as the Nakheel bond price fluctuated in response to government hints and statements.

Dubai also issued a new law on Thursday clarifying the government's financial relationship with its subsidiary departments. What does and does not belong to the government has been a key area of concern, a result of the emirate's opaque financial structure.

Advisers said reports that cash surpluses of government companies were to be transferred to government coffers were based on a mistaken translation.

The Nakheel bond had become the litmus test for the emirate's financial viability. The World meanwhile was the test case for its real estate model, centred on eye-popping skyscrapers and land reclamation projects.

When financial crisis struck, 30pc of The World's 254 islands remained unsold, and only one, a show-home belonging to the ruler, had been developed.

The owner of Ireland, Larionovo, went into liquidation. Nakheel have always said that the project would go ahead, however.

"Thirty-three islands have been handed over to developers in the past year and they have been working to obtain the necessary permits and design and planning approvals," a Nakheel statement said.

Mr Kleindiest owns Austria, Switzerland, Sweden, Poland and Monte Carlo, among others. He hopes to develop two five-star hotels and a shopping arcade on St Petersburg, and a beach called Amsterdam on Holland.